Good Business Pays Instinctively
This article appears in our Q1 2023 issue of Finance Transformation Magazine. To download the issue, click here
Terry Corby, Founder of Good Business Pays, explains his motivation to establish it at the start of the Pandemic. He is working tirelessly to recognise and reward those Firms who instinctively pay on time with his Good Business Pays Awards.
In March 2020, the Prime Minister announced a nationwide lockdown to curb COVID-19, closing many sectors and ordering the public to stay at home. At the time, I was Chief Commercial Officer for the Creative Industries Federation.
As theatres closed, film and TV production slowed, music events were cancelled, those in the creative sector suffered and much work was lost. Tales from across the sector of slow and late payment causing small companies to fail began to drift in my direction.
I wanted to help and quickly learned about the brilliant tools and processes that a large company could utilise to pay their suppliers fast. But for that to happen, it would require the support of the CFO at a large company. I spoke to many CFOs in large companies and the responses were almost identical. "Faster payments to small suppliers - yes that's very important. We are fine though, it's everyone else that's the problem."
It was then I realised how I could help. This required a hearts and minds campaign, something I understand. In the 1980s, I had worked successfully with major Retailers to campaign for Sunday Shopping and the Sunday Trading Act. I understood the mechanics of a complex campaign to bring about big change.
Good Business Pays was born. I was lucky to have the initial help of a Fintech called Previse, Mastercard and some funding from the Banking Competition Remedies fund to get us started.
At the beginning of 2021, I became the founding CEO of Good Business Pays, quickly gaining the support of the five biggest business organisations in the UK: The Federation of Small Businesses (FSB), the CBI, Institute of Directors, Make UK and the British Chambers of Commerce.
Credibility built gave us a route into the BEIS and to the UK Small Business Commissioner, both of which have been important to our work. The out-of-date, slack regulatory environment around payments has not helped our cause to bring an end to slow payments.
In 2017, when it became a statutory duty for large companies to report their payment practices every six months, 10,000 companies filed reports.
In 2023, around half that number bothered. In the past seven years only 18 companies have been chased because of non-compliance. No legal action has been taken, no-one has gone to jail. Companies have learned that it doesn't matter if you fail to comply. We are working hard with all parties at Westminster to change this and hope the current Review of Payment Practices will see a strengthening of these regulations.
In the meantime, we have focused our campaign on the heroes and villains of payment practice. We analyse this stuff every day and we know what good and bad payment behaviour looks like - and we call both out.
In 2021, we created the Fast Payer Awards to recognise the fastest paying big companies. Winners need to pay in 27 days or less (average), pay 95% or more of all their invoices within agreed terms AND deliver these results over a full twelve-month period.
The awards are now in their second year and in November 2022 we were happy to award nearly 300 companies with our award.
However, only 270 out of 5,158 reporting companies qualify, so it's not hard to work out that most companies still take a long while to pay. So, we also call out the worst performers in the press and in our Late Payers Lists.
It may sound petty but calling out bad payment behaviour influences change - and fast! In the past 18 months, we have called out some of the slowest payers, including Rolls-Royce Power Engineering, Tui Travel, Tennent Calendonian Breweries and Sainsbury's Bank.
As a result, we have seen major improvements in terms of time to pay by all these names, some almost cutting payment time by half or more. All this within a few months. So, we KNOW that changing your payment culture doesn't have to take long.
I also wanted to understand if the fast-paying companies shared other characteristics beyond paying fast. So, we carried out in-depth research of the 100 Fast Payers we first recognised in 2021, and we did indeed discover some important characteristics that Fast Payers share:
• Fast Payers just get on with it without shouting about it!
• Fast payment is a behaviour set by the CFO and followed by management
• Payment culture aligns with their broader company culture
• Fast payers are led by leaders with many years' experience in their company.
Although they may seem obvious, these findings are important, because they confirmed my hypotheses that fast payment is a choice. It was heart-warming to see. Because in my two years developing the Good Business Pays movement, I have met many business and finance professionals that want to make that choice. Our role is to create the environment for them to do so, and we are making tremendous progress on that journey.
To read our Report "Understanding Payment Culture" or to check the payment performance of any reporting UK company, visit our website, www.goodbusinesspays.com
About the author: Terry Corby
Terry Corby is a Board level Executive for over 30 years. He is a former Partner at both Accenture and KPMG. He started his career in the Media before holding Executive roles at Sainsburys, American Express and Creative Industries Federation.